Darling promises Fiscal Responsibility Act to reduce deficit

Chancellor Alistair Darling has promised to introduce a Fiscal Responsibility Act to reduce the budget deficit.

Speaking at the Labour party conference in Brighton today, the chancellor said Labour would cut spending according to rationality, not dogma, as the Tories would.

"We will introduce a new Fiscal Responsibility Act to require that the government reduces the budget deficit year on year, ensuring that the national debt remains sustainable in the medium term," he told delegates.

"But we need to do that rationally, in a way that is right for the economy, not driven by dogma."

Mr Darling also promised to set out how and where cuts would take place in the upcoming Pre-Budget report.

"In the next few weeks, I will set out in the Pre-Budget report how we will protect front-line services, bring the deficit down, and invest in the country's future."

But Mr Darling was cautious to stress the differences between Labour's approach to cuts and that of the Tories.

"I welcome the chance of a mature debate on how we achieve this goal - even if it is hard to see the shadow chancellor taking much part," he said.

"There has, after all, been little that is grown up about his performance so far."

Mr Darling also warned banks they cannot return to "business as usual".

To pacify the left of the party, which remains distinctly uncomfortable with the rhetoric emerging from the leadership, the chancellor said he plans to bring in new legislation forcing the City to accept executives cannot receive bonuses for long-term failure.

He warned the country faces a "big choice" about values as well as party politics.

"Let me assure the country - and warn the banks - that there will be no return to the business as usual for them," Mr Darling said.

"So in the next few weeks we will introduce legislation to end the reckless culture that puts short-term profits over long-term success."

His keynote speech follows a warning in an interview in the Observer newspaper yesterday that Labour's leadership has lost the "will to live".

Gordon Brown dismissed his chancellor's disillusioned comments, saying he would not "roll over" ahead of the coming general election.